The power to really move the needle on issues within the private equity industry has always lain with investors, and yet there are not many among the LP community who are willing to rock the boat. But in 2015, under the guidance of CIO of private markets Ruulke Bagijn, PGGM did exactly that.
Bagijn did not just oversee these changes, she took the lead, cementing her place as one of the most influential voices on the European private equity landscape.
In April, she took part in a roundtable discussion in the Dutch parliament to investigate the poor performance and bankruptcy of several Dutch portfolio companies, as well as the role of private equity within the country’s economy.
Following on from its guidelines on alignment and fees published at the end of 2014, Bagijn went a step further in August and asserted that by 2020 PGGM would stop investing in private equity managers who did not fully disclose their fees.
PGGM set out a new strategy for “acceptable remuneration”, which requires asset managers to be transparent regarding their pay and remuneration structures; performance fees only to apply in the event of above-average performance that is agreed in advance; and only basic remuneration to be paid for the costs and pay of the fund’s management.
“This is not something that can be achieved in the short term, and we realise that we also need this market in the meantime in order to generate returns for a decent pension,” Bagijn said of the strategy. “So, it is a journey that requires stamina, in which we will focus on undesirable practices and denounce these to the financial services providers and publicly as well.”
In November, Bagijn stood behind Dutch Labour Party lawmaker Henk Nijboer, who proposed tax reform to protect Dutch pensions and companies against “harmful” private equity firms, praising him for “rightly draw[ing] attention to excesses in private equity” and calling for greater transparency on remuneration and how it is linked to performance.
Over the course of the year Bagijn proved time and again her unwillingness to accept the status quo, her enthusiasm for engaging on issues at the heart of the private equity industry and her determination to do the best by PGGM’s members. We look forward to seeing the GP community rise to her transparency challenge in 2016.